Business unease over curate's egg budget

The initial reaction from business groups to the UK Budget on Wednesday was that it contained a lot of good bits, but some dodgy elements bits, too.

David Sapsted

3 March 2021

Unsurprisingly, the plan to increase the Corporation Tax from 19 to 25 per cent on the nation's most profitable companies caused the most consternation, but there was also a call from manufacturers for a comprehensive, long-term industrial strategy.Tony Danker, director-general of the Confederation of British Industry (CBI) described the Budget as "succeeding strongly in protecting the economy now" and kick-starting recovery, but added it left open the question of UK competitiveness in the longer term.“The chancellor has gone above and beyond to protect UK businesses and people’s livelihoods through the crisis and get firms spending," he said.“But moving Corporation Tax to 25 per cent in one leap will cause a sharp intake of breath for many businesses and sends a worrying signal to those planning to invest in the UK.“The government must now have a laser-like focus on the UK’s competitive position in the round, including fundamental reform of the unfair business rates system. The UK must remain attractive for every type of business, from the innovation, high-growth UK homegrown firm to the global firms investing in the UK. We look forward to working with the government to achieve this.”Jonathan Geldart, director-general of the Institute of Directors, said the prospect of higher taxes would "no doubt bite for many firms still tending to wounded balance sheets".However, he felt delaying and tiering the the corporation tax rise was a pragmatic approach, although he wanted to see adjustments to the plan ?should remaining on the table as a clearer picture of the recovery emerged."Overall there is much for businesses to get behind in this Budget, and the Treasury should remain prepared to extend support if the roadmap goes off course, whilst building on its stimulus package today to drive long-term growth well beyond our immediate recovery," Mr Geldart added."This Budget delivers a solid platform for many businesses to relaunch as the economy reopens. Widening income support for the self-employed is a step forward, but the Chancellor missed a trick by not providing grants for company directors who continue to be left out in the cold."Miles Celic, CEO of the financial services lobby group TheCityUK, felt the Budget rightly focused on supporting the economy through the pandemic and boosting long-term growth and productivity. "The focus on innovation, investment and infrastructure across the whole of the UK reflects many of the priorities our industry has long called for," he said.

“Our industry is already the biggest contributor to Britain’s public finances. However, the UK cannot forget it exists in a highly competitive global landscape."Changes to corporation tax need to be matched with a commitment to streamlining and simplifying the UK’s tax code, and we welcome the review of the bank surcharge which has long placed UK headquartered firms at a disadvantage to those in New York and in Asian centres. We look forward to seeing further detail on this proposal."Mr Celic also welcomed moves to put the UK at the forefront of the green finance revolution and "to make sure we can find and train the highly skilled talent we need from within the UK and internationally".Adam Marshall, director-general of the British Chambers of Commerce, said there was much to welcome in the Budget for business communities across the UK."The chancellor has listened and acted on our calls for immediate support to help struggling businesses reach the finish line of this gruelling marathon and to begin their recovery. Extensions to furlough, business rates relief and VAT reductions give firms a fighting chance not only to restart, but also to rebuild.“While no business will relish paying higher rates of Corporation Tax in future, the impact of the chancellor’s tough decision is blunted by the big new incentives for investment, lower rates for the smallest firms, and the extension of coronavirus support measures in the short term."Stephen Phipson, chief executive of the manufacturers' organisation Make UK, said the Budget measures provided certainty and clarity given the difficulties posed by the pandemic.“In particular, industry will welcome the extension of the furlough scheme and a clear recognition that we urgently need an investment-led recovery. The promise to consult on further changes to R&D is also welcome and government must now move urgently to implement this so further policies to boost levels can be brought forward," he said.“We must now seize the opportunity provided by new technologies and the drive towards net zero to set out a longer term vision for the economy. This must include a long-term Industrial Strategy which looks ahead twenty years and involves a laser like focus on innovation based on a partnership between the public and private sectors, together with our world class science base.”